I don't understand why a VC who initially supported one idea would or necessarily should support a pivot to a completely different one that they already aren't a fan of. Yes there are some companies that pivoted and succeeded but that doesn't mean there is something special about the pivot itself. It makes sense that your investor, who doesn't like neobanks, would not want to invest in a neobank startup.
Our VC told us they won't follow for Series A. At the worst moment
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Re: Our VC told us they won't follow for Series A. At the worst moment
#22I'm not surprised the neo bank idea was shut down. The profit margins are really low and moving forward, capital is going to be expensive. In India, most neobank startups are bleeding money through rewards and incentives funded by VCs and they are all shutting down one by one. There is no moat. Support is expensive. They are still tied up with a traditional bank because getting bank license is not an option for start…
I agree with you around the analysis, but how do you explain the success of Ramp in the US then? Re India, will RazorPay win on the neobank side as well? As they have the critical size?
Ramp is focused on corporate finance management than a regular neobank.
They don't take individual customers or startups without funding. They are focused on high ticket corporate customers.
For Indian market, razor pay and open money would be sort of equivalent focused on corporate banking.
Re: Our VC told us they won't follow for Series A. At the worst moment
#23I work in finance and I am not sure if I want to applaud or feel for people starting neobanks. The amount of regulation and infrastructure needed to deal with other people’s or companies’ money is downright insane and requires tons of upfront investment. Maybe I do not understand what “neobank” is. Is it that they concentrate on a very narrow part of banking functionality that is relatively light on regulation? Or do…
Most neobanks don't start with a banking license.
So they're the equivalent of Paypal (Money transmitting license?)
They can hold/transfer money but they're not protected by regular banking deposit garantees.
So yes, they can have reduced costs/regulatory overhead when starting up.
Also they avoid legacy infra (physical and digital)
- No 1000s of branches/employees across the country
- No legacy digital systems (Mainframes/COBOL)
- No M&A spaguetti from acquiring 10x banks over time
Re: Our VC told us they won't follow for Series A. At the worst moment
#24Why is this a Tell HN? I thought those were for providing information of general utility to the HN community (twitter is down, etc.). I expected this was a name-and-shame of some VC, but instead it's a link to a blog post.
Even after reading the text in the Tell HN multiple times, I still don't know what exactly happened. IMO, a Tell HN should be a self-contained post that actually tells HNers something that is particularly timely and of general relevance. It should not be akin to "read my blog post about something that happened to my startup".
This seems like clickbait, especially with the title.
Re: Our VC told us they won't follow for Series A. At the worst moment
#25>> When Qonto was at seed, investors were wary because acquiring a SME customer cost around €3,000. But the Qonto team managed to cut this cost by at least 50 times — consistently and at scale.
- How did Qonto cut cost of acquiring customers by 50x?
- Why was this not reproducible?
Re: Our VC told us they won't follow for Series A. At the worst moment
#26Are you raising any more money? If so please send me wire instructions breck7@gmail.com
Re: Our VC told us they won't follow for Series A. At the worst moment
#27I'm not surprised the neo bank idea was shut down. The profit margins are really low and moving forward, capital is going to be expensive. In India, most neobank startups are bleeding money through rewards and incentives funded by VCs and they are all shutting down one by one. There is no moat. Support is expensive. They are still tied up with a traditional bank because getting bank license is not an option for start…
I agree with you around the analysis, but how do you explain the success of Ramp in the US then? Re India, will RazorPay win on the neobank side as well? As they have the critical size?
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Re: Our VC told us they won't follow for Series A. At the worst moment
#28I work in finance and I am not sure if I want to applaud or feel for people starting neobanks. The amount of regulation and infrastructure needed to deal with other people’s or companies’ money is downright insane and requires tons of upfront investment. Maybe I do not understand what “neobank” is. Is it that they concentrate on a very narrow part of banking functionality that is relatively light on regulation? Or do…
Most neobanks don't start with a banking license. So they're the equivalent of Paypal (Money transmitting license?) They can hold/transfer money but they're not protected by regular banking deposit garantees. So yes, they can have reduced costs/regulatory overhead when starting up. Also they avoid legacy infra (physical and digital) - No 1000s of branches/employees across the country - No legacy digital systems (Main…
Obviously depends on jurisdiction, but believe some jurisdictions have traditional banks that specialize in being the “backbone” for some neobanks and the customers are really just customers of those banks.
Re: Our VC told us they won't follow for Series A. At the worst moment
#29we were not the right team for Web3 I commend you on your foresight for this decision.
I do think most web3 founders are newbies, but somehow you need to be very passionate about the space...
Yeah a combination of people constantly posting hate on Web3, the need to spend a lot of time keeping on top of a stupidly fast sector, and the users demanding you move fast for maximum ROI while also demanding perfect security is just a lot to deal with mentally. I quit Web3 earlier this year.
Re: Our VC told us they won't follow for Series A. At the worst moment
#30we were not the right team for Web3 I commend you on your foresight for this decision.
I do think most web3 founders are newbies, but somehow you need to be very passionate about the space...
Wouldn't "deluded" instead of "passionate" still fit more?
Calling someone "web3 founder" is as weird to me as calling someone "sql founder". I am still waiting for someone to show me the killer app everyone uses, or provides any other value besides speculation and how it requires or just works better with "web3 tech".